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Explore the history of fresh produce distribution in Saskatchewan, focusing on Direct Store Door issues and solutions to improve quality, volume, packaging, handling, and distribution efficiency.
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Distribution of Fresh Produce in Saskatchewan Presented by Mike Furi – The Grocery People Ltd.
History of Distribution to Retail The Saskatchewan retail marketplace consists of 5 corporate retailers and 5 groups of independent retails. The corporate retailers and the Co-ops own their own wholesale distribution. There are only two major distribution centers for fresh produce in Saskatchewan. One owned by Loblaws the other is the Grocery People Ltd., owned by Federated Co-operatives Ltd. During the presentation when referring to either retail or wholesale they term can be interchanged.
History of Distribution to Retail Historically retail allowed DSD – Direct to store Door As volumes increased these were restricted or eliminated by most corporate retails Reasons included Inconsistent quality Price Availability Legal issues – recalls Increased costs
History of Distribution to RetailDSD Issues Inconsistent quality Retails need to establish quality standards so the consumer is confident when they buy. This was not the case with DSD, each delivery may have had a different quality to it. Price Prices paid were not being set by a head office. This resulted in some product being sold at below purchase pricing.
History of Distribution to RetailDSD Issues Availability With DSDs the supply was inconsistent resulting in out of stocks at retail and over stocks at the wholesale. Legal Issues With DSDs if there was a product recall the odds are the grower was too small to handle the costs and the wholesaler would be held responsible. In many cases the wholesaler won’t even know who the grower was.
History of Distribution to RetailDSD Issues Increased cost Each transaction requires a cost to process. Studies have shown anywhere from $25 – over $100 to process. In many cases the product being purchased was less than the cost of processing the transaction.
History of Distribution to RetailDSD Issues As food born health concerns became an issue DSD were eliminated by all corporate retails and was discouraged by wholesalers servicing independents The reasons for this was there was no way to confirm that the growing conditions would meet any standards.
History of Distribution to RetailDSD Issues This caused concern for retail brands. The CHC introduced an on farm food safety program to assist with addressing the concerns. Not until 2009 was this bench marked to an international program and CHC changed the name to CanadaGAP.
History of Distribution to Retail Now that the retail marketplace has a method to address the food safety concerns, we’re ready to encourage the Saskatchewan growers to re-enter the Saskatchewan marketplace. Some wholesalers/ retailers will encourage DSDs, others will encourage DC deliveries and some will pursue both.
Issues In Our Marketplace Selection Volume Quality standards Packaging – CFIA Handling Centralized distribution points EDI Cost Fear
Solutions to the Issues Selection The growers will have to work with retailers to determine what it is they can grow to meet our needs. This will probably require guidance from some governing body.
Solutions to the Issues Volume To achieve the volume required by wholesalers will require cooperation between growers. Demand is huge for most items that Saskatchewan can grow well while supply is Limited. The supply is enough to feed the market gardens and Farmers Market demands. If the goal is to truly increase the consumption of Saskatchewan grown products, the wholesale distribution supply chain must be involved.
Solutions to the Issues Quality standards The quality will have to meet CFIA standards as a minimum. Most retailers standards exceed the CFIA minimum. To meet the standards the pack outs will be higher than most growers expect or want.
Solutions to the Issues Packaging Standards The retailers will expect the packaging to meet CFIA requirements for both retail and wholesale. Some will provide a little wiggle room but if the CFIA issues a warning or citation, the grower will be held responsible. Empty beer boxes doesn’t make the grade.
Solutions to the Issues Handling The growers will be held to the same expectation and standards that all other suppliers are expected to meet. Being GFSI (Global Food Safety Initiative) certified. Cooling at time of harvest. Storage facilities that meet the GFS1 standards. On time deliveries in the quantities ordered.
Solutions to the Issues Centralized Distribution Points The cost of handling product at the wholesales is high and reducing the cost creates a competitive edge. To achieve this, wholesales want as few deliveries as possible. Consolidation of product to meet the needs would be an asset. One stop shopping for the wholesaler.
Solutions to the Issues EDI - Electronic Data Interchange Provides for exchange of both orders and payments. Some form of EDI is mandatory at most wholesalers. Some provide an option but most will expect EDI to be implemented prior to any deliveries.
Solutions to the Issues Cost The growers have a concern that if they move to wholesale volumes that the prices received will be lower than the current farm gate returns. This will be a reality. The volumes and the one entry point should improve the financial return.
Solutions to the Issues Fear To address these issues will require large investments in both money and time. Many of the growers are concerned that if they make these investments they have no guarantee that they will get into the Saskatchewan marketplace. In most cases the success of fruits and vegetable crops are still influenced by mother nature.
Moving Forward Commitments Today there are two wholesalers that are actively pursuing the Saskatchewan growers. They are using different methods, but both are reaching out, which is a change from as little as 1 year ago. The one I am most familiar with is the TGP program. This program allows the grower to grow into the volumes required to meet the wholesalers needs.
Moving Forward Final Comments If we are serious about making Saskatchewan a player in the vegetable market in our own province it is a must to create a system that includes the wholesalers. The wholesalers will create the volume to achieve this. Farmers Markets, Farm Gate will not achieve the volumes to meet the goal of being self sufficient where and when possible. To accomplish that we need to continue to work as a team that includes growers, wholesalers and the provincial government.
Thank you Presented by Mike Furi – The Grocery People Ltd.
